Macy’s $600 Blenders Win Boomers in Kitchen-Gadget Surge
There are all sorts of new things in the aisles for small kitchen appliances these days, such as men.
Not so long ago, small kitchen appliances were confined to a few main items such as toasters. Now, after a decade of kitchen-gadget makers adding high-tech features and with consumer spending recovering from the recession, chains including Macy’s Inc. (M) (M) and Williams-Sonoma Inc. (WSM) are selling scores of specialty appliances from two-stage juicers and food dehydrators to high-tech teapots and baby-food making systems.
Small kitchen-appliance purchases jumped 10 percent to $5.51 billion in 2012, surpassing the 9.4 percent increase the previous year and growing at double the rate of the whole $18.3 billion small-appliance category, which includes the kitchen gadgets plus items like hair dryers and vacuum cleaners, according to NPD Group Inc., based in Port Washington, New York.
Driving the trend is Americans’ growing desire to eat healthier and buy tools that help them prepare natural foods, said Debra Mednick, home industry analyst for NPD. Baby boomers have led the charge, she said.
“It’s not about margaritas anymore,” Mednick said. “It’s about getting your antioxidants.”
The machines have the added benefit of drawing male shoppers to a store department that traditionally attracted more women, said Stephen Cardino, fashion director for home at Macy’s.
“Guys love anything with a plug,” Cardino said in a telephone interview.
Appliance makers, such as Benton Harbor, Michigan-based Whirlpool Corp (WHR).’s KitchenAid Inc.; East Windsor, New Jersey- based Conair Corp.’s Cuisinart; Olmsted Falls, Ohio-based Vita- Mix Corp., and Botany, Australia-based Breville Group Ltd (BRG)., have added digital screens and industrial-grade materials to devices to help command higher prices and separate themselves from the mass-market versions from Hamilton Beach Brands Inc. and Jarden Corp.’s (JAH) Oster and Sunbeam brands.
The higher price of some gadgets, including $600 processors and juicers, drove the kitchen-appliance category’s sales gain last year as the number of units sold held about steady at 132.2 million, NPD said.
The popular appliances allow consumers to prepare food from scratch, or semi-scratch, giving them more control over the ingredients that go into it, Mednick said. Shoppers also are attracted to commercial-quality appliances that allow them to replicate items, such as smoothies, that they typically enjoy outside the home, she said.
Introducing more high-end specialty appliances -- including single-serve coffee machines and soda-makers -- helps retailers such as gourmet-cookware chain Williams-Sonoma carve out some exclusivity in a category that suffers from wide distribution and price competition, said Matt Nemer, an analyst with Wells Fargo & Co. in San Francisco.
“You may have all the newest Krups appliances, but so does everybody else,” Nemer said. “The problem with lack of exclusivity is that then it comes down to a pure price shop, and then you can find it on Amazon.”
He rates Williams-Sonoma market perform, the equivalent of hold.
High-priced kitchen items reap gross margins of 50 percent or wider, compared with an average of about 30 percent for small electric appliances, Mednick estimates. Gross margin is the percentage of sales left after subtracting the cost of the goods.
Williams-Sonoma posted a gross margin of 41.3 percent in its most recent quarter, while Target Corp.’s (TGT) was 27.8 percent.
Williams-Sonoma shares have gained more than sixfold since the end of 2008 and closed yesterday at a 27 percent premium to the Standard & Poor’s 500 Index on a price-to-earnings basis. Macy’s has more than quadrupled since 2008. Williams-Sonoma was little changed at $50.70 at the close in New York today, while Macy’s slid 0.4 percent to $43.39.
Besides Williams-Sonoma and Cincinnati-based Macy’s --where home goods account for about 16 percent of sales --retailers pushing small kitchen appliances include Bed Bath & Beyond Inc. (BBBY), Kohl’s Corp. (KSS) and the smaller Sur La Table Inc., owned by Investcorp SA, the Bahrain-based investment company.
One strategy for generating additional sales and pricing power is to make a product even more specialized, as seen with juicers that have evolved into slow juicers. Macy’s $369.99 Fagor slow juicer extracts juice in a two-stage process that keeps vitamin and nutrients in every cup for “a healthier approach to filling up,” the retailer says on its website.
Williams-Sonoma, based in San Francisco, sells a commercial-grade food processor from Cuisinart for $799.95 that has a feed tube wide enough to accommodate whole fruits and vegetables without pre-cutting. Among its other products are a $369.95 multi-layer Sedona dehydrator, with a quiet setting for nighttime, to make dried fruit, vegetable and meat snacks.
Macy’s (M) has a Ninja BL771 blender-and-food processor “mega kitchen system” for $319.99. Its Vitamix Professional Series 500, priced at $599.99, features laser-cut stainless steel blades that power through ice in seconds to make smoothies more quickly. A $139.99 Kalorik baby-food maker, which is a combination processor and steamer, “gives you the knowledge of what you are putting in the mouth of your precious loved one -- so long unhealthy fillers and preservatives!” Macy’s says.
Sleek Italian designs, digital readouts, simplified pre- setting functions, and the bright colors -- including metallic pink -- that have been popular in recent years also have helped tempt consumers, Macy’s Cardino said.
The “new buzz” is revolving around tea makers and yogurt makers, Cardino said.
Consumers like him are switching to tea after discovering the high calorie count of coffee-chain lattes, he said. They also want to personalize their yogurt, he said.
So Macy’s sells yogurt makers, including a $39.99 StoreBound version that helps prepare lower-sugar yogurt with a digital interface with blue-lit timer, and a $249.99 Breville tea maker with a basket that automatically raises at the correct time to prevent over-steeping.
“This is not your grandmother’s teapot,” Cardino said.
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